Early planning can create “mighty oaks”, writes tax and technical expert, Obi Nnochiri, in the second of two articles.
Previously, we looked at the importance for professionals of ensuring they have effective protection for their income and their loved ones at the centre of their wealth management strategy – and that they understand the effect of taxation on any long-term plan. Once the details of these basics of wealth planning have been addressed, it is time to look at retirement and investment plans.
Thoughts about retirement are for most busy professionals probably not at the forefront of their minds. But, as we all know, it is never too early to address the matter of retirement. As the old proverb states, “Mighty oaks from little acorns grow” – so, modest or small sums that are put aside today can lead to greater gains in the future.
Regularly saving for retirement from early on in a career will allow an individual to take advantage of the accumulative benefits of long-term investment. For anyone considering a long-term investment approach, it is important to identify a strategy early on that fits their individual circumstances, needs and expectations. Is the investment for capital growth or income? There needs to be, too, an understanding of the key balance between risk and reward and the impact that wider global economic forces can have on investments.
Crucially, investors need to look at who will manage their investments. Monitoring them to ensure they are managing funds as desired is another part of the process – and equally as important. An investment approach that is managed by professionals, who know what they are doing and understand investment processes and markets, is vital when considering a long-term strategy.
Finally, there is a simple lesson that can be drawn as Britain heads towards a general election in May, with – along the way – a new tax year: make use of allowances and reliefs now – no-one knows when a future government may decide to change the tax rules. The maxim for all – however busy or immersed they are in their career and private lives – should be carpe diem, or ‘seize the day’. It could well lead one day to mighty oaks…
The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.
Obi Nnochiri is Head of Division – Partner Consultancy at St. James’s Place